View Full Version : Fuel cost rises hit Easyjet share price
newswatcher
7th Jun 2004, 08:36
Fuel (http://news.bbc.co.uk/1/hi/business/3782403.stm) worries hit Easyjet.
In the article, Ray Webster claims that Easyjet is Europe's number one low-cost airline On the Ryanair site it saysOur Financial Reports illustrate why Ryanair is Europe's No. 1 Low Fares airline
Well I guess one of them is right!!:confused:In case anyone is confused, the "Webster" quote has been removed from the later article!
Why would higher fuel prices hit one airline (Easyjet) rather than all airlines' costs and therefore share prices equally ? The linked article writes like it is just an Easyjet problem.
Jordan D
7th Jun 2004, 09:45
Not sure that it would affect them uniquely, but they have been going on for a while now that they would not rise prices (or add a fuel levy like BA/Virgin/SQ/etc.), and so the stock market was a bit surprised when they came out this morning and said that actually it would affect them ... QED share price slumped by 20% ...
Jordan
LGS6753
7th Jun 2004, 19:25
Some airlines 'hedge' fuel purchases, i.e. they agree in advance how much they will buy/how much they will pay. But not all airlines do. Also the periods over which airlines 'hedge' vary, so an advantageous 'hedge' will eventually expire, causing their costs to increase/decrease suddenly.
EZY have been very open about their hedging prices (on their website) which I would consider to be highly confidential.
My guess is that this exercise is about conditioning the market to expect a lower profit figure, so that it can be 'beaten' in the event.